Overview of State Approaches to Section 125 Policies Designed to Expand Coverage

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Policy
 
State
(Effective Date)
Applicable Firm Size/Type
Section 125 Requirement
Connecticut (October 2007)
Connecticut employers of all sizes that (a) offer fully insured health coverage and (b) require an employee contribution to that coverage
Such employers are required to establish a Section 125 plan.
Indiana (January 2008)
All Indiana employers that do not currently offer health coverage or a Section 125 plan
Created a tax credit to encourage employers to establish a fully insured health plan in conjunction with a Section 125 plan. The tax credit is equal to the lesser of $50 per employee or $2,500 for two years if the employer offers such a plan.
Maryland (September 2008)
Non-offering Maryland firms with 2 to 9 full-time employees participating in Maryland’s new subsidized coverage initiative
To qualify for a premium subsidy, the employer must establish a Section 125 premium conversion plan.
Massachusetts (October 2007)
Massachusetts employers of 11 or more employees
Such employers must (a) maintain a Section 125 plan, (b) enable employees to pay for their coverage (either through their employer or through the Connector) on a pre-tax basis, and (c) file a copy of the Section 125 plan document with the Connector.
Minnesota
(July 2009)
Minnesota employers that do not offer health insurance
with more than 10 employees
Such employers are required to establish a Section 125 plan. This proposal does not require employers to offer health insurance coverage or contribute to it and includes an opt out provision.
Missouri
(to be
determined)
Missouri firms offering fully-insured coverage with an
employer contribution
Such employers are required to establish a Section 125 plan.
Rhode Island
(July 2009)
Rhode Island employers of 25 or more employees
Such employers are required to establish a Section
125 plan. The legislation does not require companies to contribute to their employees’ insurance or to offer workers the chance to buy insurance at a group rate.

Sources are:
http://www.cga.ct.gov/2007/rpt/2007-R-0690.htm; http://www.statecoverage.net/programs-indiana.htm; http://mhcc.maryland.gov/partnership/about.aspx;
http://www.mahealthconnector.org/portal/site/connector/; https://www.revisor.leg.state.mn.us/bin/bldbill.php?bill=ccrsf3780.html&... http://
www.house.mo.gov/billtracking/bills071/billpdf/truly/HB0818T.PDF; http://www.rilin.state.ri.us/billtext07/senatetext07/s0448b.pdf
SCI would like to thank Lynn Quincy, Mathematica Policy Research, Inc., for her contributions to this table.